This country-specific Q&A provides an overview to Patent Litigation laws and regulations that may occur in Taiwan.
What is the forum for the conduct of patent litigation?
Taiwan’s Intellectual Property Court (IP Court) has jurisdiction over the first and second instances of patent infringement litigation. The IP Court is staffed by technical examination officers who have expertise in various fields and who have served previously as examination officers at Taiwan’s Intellectual Property Office (TIPO). The technical examination officers not only review arguments made by both parties in respect of technical issues, but also provide to the judges consulting opinions.
What is the typical timeline and form of first instance patent litigation proceedings?
In most cases, there are separate hearings being held to examine issues of claim construction, invalidity, infringement, and damages. Typically, the parties are required to exchange briefs prior to each hearing. The IP Court reviews the technical issues (namely, validity and infringement issues) with the support of technical examination officers. Normally, the proceeding of patent infringement litigation takes one to two years at the first instance.
Can interim and final decisions in patent cases be appealed?
The final decisions of the first instance in a patent infringement lawsuit made by one judge at the IP Court can be appealed unconditionally to a panel of three judges of the same court. The appellate decision made by this panel of judges can in turn be appealed to the Supreme Court, provided that the value of the claim exceeds NT$ 1.5 million. It usually takes approximately one to one and half year to conclude the proceeding at the second instance and six months to one year to conclude the proceeding at the third instance.
The IP Court in some cases will render interim decisions on specific issues, such as invalidity or infringement. Those interim decisions could not be appealed until the IP Court renders its final decisions on a patent litigation.
Which acts constitute direct patent infringement?
Taiwan’s Patent Act stipulates that anyone who manufactures, offers to sell, sells, uses, or imports patented goods will be liable for infringement. The provision regulates acts of direct infringement, such that manufacturing, offering to sell, selling, using, and or importing patented goods will be deemed direct patent infringement.
Do the concepts of indirect patent infringement or contributory infringement exist? If, so what are the elements of such forms of infringement?
Taiwan’s Patent Act does not have explicit provisions over indirect/contributory infringement. Theories of indirect/contributory infringement could be found in Taiwan’s Civil Code. In practice, patent owners take action against indirect infringers by resorting to the joint tort theory of the Civil Code, alleging that the indirect infringers are joint tortfeasors with the direct infringers under the Civil Code. The elements of indirect infringement under the Civil Code include: (a) the accused person has induced others to commit direct infringement or facilitated or provided assistance to those who conduct direct infringement, (b) the accused person has a subjective intention to conduct the abovementioned acts, and (c) the direct infringer is found to be liable for patent infringement.
How is the scope of protection of patent claims construed?
The scope of protection of patent claims includes the literal scope and the scope expanded under the doctrine of equivalents. The literal scope of a patent is determined based on the claims set forth in the specification. When interpreting the scope of the claims, the description and drawings of the patent may be used as references. Evidence used to interpret the scope of the claims includes both intrinsic and extrinsic evidence. Intrinsic evidence include the claims, the description of the invention, the drawings and the file of prosecution history. Extrinsic evidence refers to the technique information previously disclosed, such as patents, books, magazines, reports, or products. The scope expanded under the doctrine of equivalents is provided to protect the interests of patentees. The scope will be expanded to cover substantially the same functions, means, and results. This expansion can prevent others from derogating a patent without changing or replacing substantial technical features set forth in the specifications.
Prosecution history estoppel will also be considered when construing the scope of patent claims. When the supplement, amendment, correction, response, and reply related to patentability narrow the scope of the claims during the process of examination of a patent application and / or maintenance, the patent owner is no longer allowed to claim the limited or excluded parts in subsequent patent infringement litigation.
What are the key defences to patent infringement?
In the IP Court, the key defences to the claim of patent infringement usually include “Patent invalidly”, “Non-infringement”, and “Statute of Limitations”. With the defence of “Patent invalidly”, the defendant may argue the lack of the required “Utility”, “Novelty”, and “Non-Obviousness”. With the defence of “Non-infringement”, the defendant will argue that the disputed product does not read on the patent claims and is not applicable to the doctrine of equivalents. Furthermore, a patentee must bring a claim for damages within two (2) years after he or she has become aware of the damages and person(s) liable for said damages; and one’s claim for damages will become extinguished if it is not exercised within ten (10) years after the time of the alleged infringement, no matter whether or not this person has become aware of the damages.
What are the key grounds of patent invalidity?
To be eligible for patent protection under Taiwan’s Patent Act, an invention shall meet all the requirements of “Utility”, “Novelty”, and “Non-Obviousness”. Patent protection shall be rejected for an invention if this invention is not industrially applicable, or this invention was disclosed in a printed publication or was publicly exploited or known prior to the filing of the patent application, or this invention can be easily made by a person ordinarily skilled in the art based on prior art, the invention will not be patented. Even if the invention is patented, the granted patent right could be revoked by the patent office through an invalidation proceeding initiated by any persons who would like to challenge the patent’s validity.
How is prior art considered in the context of an invalidity action?
An invention will be considered as lacking the required novelty or non-obviousness if it constitutes part of a prior art or if someone of ordinary skills in the relevant fields could easily make the invention based on prior art.
When considering the requirement of novelty, prior art that was disclosed in a domestic or foreign patent specification or drawings that are not part of the invention for which the application was filed, but which has become publicly known or used technology, will be cited by the examiners as the ground to reject the application. Also, if an invention claimed in a patent application is identical to an invention disclosed in the description, claims, or drawings of an earlier-filed patent application for an invention, which is laid open or published after the filing of the later-filed patent application, the invention will also be considered to lack novelty in order to comply with the first-to-file principle.
Except for the first invention of the pioneer in a particular field, most patents are inventions that are cumulative of prior art. As such, the patent office/court shall avoid hindsight doubts when an invention is or not obvious in light of prior art evidence. Usually, several factors will be taken into account, such as “unexpected technical effect”, “solving long-standing problems”, “overcoming technical prejudice” and “obtaining commercial success” when determining whether a patent is non-obvious. There are also some secondary considerations under TIPO’s“Examination Guidelines” and scholarly opinions. For instance, if an invention leads to the patentee’s commercial success.
Can a patentee seek to amend a patent that is in the midst of patent litigation?
Under Taiwan’s patent practice, a patentee is allowed to amend a patent that is in the midst of patent litigation. In practice, a patentee can seek to amend a patent whenever necessary without the limitation of time, as long as the patent is valid and has not yet conclusively revoked. However, a patentee who would like to amend a granted patent can only delete claims, narrow the scope of claims, correct errors or translation errors, or clarify ambiguous statements. Except for the correction of translation errors, an amendment cannot go beyond the scope of content disclosed in the description, claims, or drawings as filed, or substantially enlarge or alter the scope of the claims as published. Examiners of TIPO will examine the amendment and determine whether the amendment is allowable. At the same time, in a patent infringement litigation, if a patentee amends the patented claims which were used by the patentee to assert the infringement, the IP Court will consider whether the amendment is allowable in the situation where the defendants disputes the amendment.
Is some form of patent term extension available?
Because of the characteristic of a pharmaceutical or agrichemical invention patent, Taiwan’s Patent Act regulates the system of patent term extensions for these kinds of patents. The Patent Act stipulates that where regulatory approval must be obtained in accordance with other laws and regulations for the exploitation of a pharmaceutical or agrichemical invention patent or the manufacturing process thereof, if such regulatory approval is obtained after the publication of the relevant invention patent, the patentee may apply for one and only extension for the patent term of said invention patent based on the first regulatory approval. Said regulatory approval can be used only once to seek a patent term extension.
There are also some restrictions on patent term extension. The extension period shall not exceed the length of time during which the patent cannot be exercised because the patentee due to the patentees r the regulatory approval with the central competent authorities in charge of the business. If the time needed to obtain said regulatory approval exceeds five (5) years, the granted patent term extension shall be five (5) years. For an object that is applicable to the extension, the abovesaid term “pharmaceutical” does not include any veterinary drug. Furthermore, when requesting a patent term extension, the request form and supporting documents must be submitted to TIPO within three (3) months after obtaining the first regulatory approval, and the request for patent term extension will not be granted if the application is not filed within six (6) months prior to the expiry of the original patent term.
How are technical matters considered in patent litigation proceedings?
In most cases, the IP Court judges will consider technical matters by themselves, with the help of technical examination officers. IP Court judges will not refer a technical issue to an independent institute unless said technical issue is extremely complicated and requires expertise of an independent institute. Both parties in some cases are allowed to present expert witness testimony to establish technical facts.
Is some form of discovery/disclosure and/or court-mandated evidence seizure/protection (e.g. saisie-contrefaçon) available, either before the commencement of or during patent litigation proceedings?
Discovery does not exist in Taiwan’s litigation. A patentee is allowed to obtain from court a compulsory evidence collection order to compel the infringing party to produce materials in possession of the infringing party and essential to a patent litigation. The patentee may also request courts to compel a third party to produce materials if said materials are in possession of this third party and necessary for the patentee to establish its case. The patentee is allowed to make a request for a compulsory evidence collection order before the commencement of and during a patent litigation proceeding.
Are there procedures available which would assist a patentee to determine infringement of a process patent?
Taiwan patent law does not provide procedures specifically helping a patentee of a process patent to determine infringement. An order for compulsory evidence collection as discussed above is the only measure available for a process patent patentee for the purpose of collecting evidence.
Is there a system of post-grant opposition proceedings? If so, how does this system interact with the patent litigation system?
Anyone who would like to challenge the validity of a granted patent could file with TIPO an invalidation action against said patent. Examiners of TIPO will consider arguments by the party initiating this invalidation action and also argument made by the patentee responding the party filling the invalidation action. The examiners will render a ruling upon the invalidation action. Any party who disagree with the TIPO’s ruling could file an appeal with the appeal review board of the TIPO’s supervising agency. Any party who disagree with the ruling made by the appeal review board could bring an administrative lawsuit before the IP Court to seek proper remedies.
Meanwhile, defendants in patent infringement litigation usually raise an invalidity defense. Under Taiwan’s IP practice, the IP Court in a patent infringement proceeding shall determine the validity issue on its own and shall not stay the proceeding and wait for the TIPO’s ruling on the invalidation action. The IP Court’s decision upon the validity issue merely binds the parties of the patent infringement litigation and has no effects on anyone other than the parties of the patent infringement litigation. In a situation where the IP Court holds a patent is invalid, the IP Court will dismiss the patentee’s infringement lawsuit on the ground that the patentee is not able to enforce said patent. In this situation, as long as the TIPO is not a party to this proceeding, the TIPO will have to rule on the invalidation action independently; in other words, the IP Court’s invilidty decision in a patent infringement proceeding does not bind the TIPO. In practice, however, the TIPO will render its ruling upon an invalidation proceeding after the IP Court renders its decision in a patent infringement proceeding and will follow the IP Court’s opinion in respect of the validity issue. As such, the IP Court’s decision on the validity issue has a de facto binding effect upon the TIPO.
To what extent are decisions from other fora/jurisdictions relevant or influential, and if so, are there any particularly influential fora/jurisdictions?
For the first instance of a patent infringement proceeding, the IP Court enjoys a non-exclusive jurisdiction. In other words, a patentee is still allowed to initiate a patent infringement proceeding before a district court with proper jurisdiction over the parties/subject matters. In practice, virtually all patentees will choose the IP Court as the forum of patent infringement litigation because the IP Court is an expertized court, better equipped with technical examination officers.
The IP Court has exclusive jurisdiction over patent infringement litigation for the second instance.
As such, the IP Court is the only forum that plays an influential role in patent litigation.
Although a patentee could also request the tariff authority to prohibit goods allegedly infringing a patent from being imported into Taiwan, this mechanism is rarely used by patentees and barely has any influence on Taiwan’s patent practice.
How does a court determine whether it has jurisdiction to hear a patent action?
For the IP Court, as long as the subject matter of a proceeding involves a Taiwanese patent or other intellectual property rights, the IP Court will have jurisdiction over this proceeding unless some extreme exceptions present.
If a patentee goes to a district court of the common court system and files a patent infringement proceeding, then the district court will determine whether it has jurisdiction over this proceeding basing on (1) whether the defendants resides in the territory that is subject to this district court’s jurisdiction; (2) whether the infringing acts or damages occur in the territory subject to this district court’s jurisdiction.
For a proceeding where at least one of the parties is a foreigner or a foreign company, the courts (both the IP Court and the district courts) will have to determine whether Taiwan courts have proper international jurisdiction over this proceeding. Usually, as long as the patentee asserts a Taiwanese patent being infringed in this proceeding, then the courts will determine that the Taiwan courts have international jurisdiction over this proceeding.
What are the options for alternative dispute resolution (ADR) in patent cases? Are they commonly used? Are there any mandatory ADR provisions in patent cases?
After a patentee files a infringement proceeding with the IP Court, the IP Court will hold a non-mandatory mediation hearing, inviting both parties to explore possibility of settling the matter outside the court rooms. But most cases could not be settled at this stage and go further to the next stage.
Taiwan arbitration law does not preclude patent litigation from being resolved by an arbitration proceeding. In practice, however, arbitration is rarely used for patent litigation.
What are the key procedural steps that must be satisfied before a patent action can be commenced? Are there any limitation periods for commencing an action?
A patentee shall in the complaint state precisely which products being sold/manufactured by the defendant(s) infringe the patentee’s patent, together with a claim chart, illustrating how the products read on the specific claims the patentee would like to assert in this proceeding. For the infringing products, the patentee shall specifically indicate in the complaint the product numbers or other information that is able to identify the products. A rough description of the infringing products will not be accepted.
Taiwan patent law does not set forth any provisions specifically imposing upon patentees any limitation periods for commencing patent infringement proceeding. For those patentees who would like to seek damage remedies, the statute of limitations requires them to file a lawsuit within two years after they become aware of infringing activities.
Which parties have standing to bring a patent infringement action? Under which circumstances will a patent licensee have standing to bring an action?
A patentee and an exclusive licensee will have standing to bring a patent infringement action. A non-exclusive licensee will also have standing to bring a patent infringement action, provided that the non-exclusive licensee files the patent infringement action jointly with the patentee.
Who has standing to bring an invalidity action against a patent? Is any particular connection to the patentee or patent required?
For an invalidation action on the ground that a patent does not satisfy the requirements (utility, novelty, and non-obvious), or that the amendment to a patent is not allowable, anyone is allowed to bring a such invalidation action and not required to establish any connection with the patentee or the patent.
On the other hand, however, for an invalidation action on the ground that the patentee of a patent is not a legitimate applicant (for instance, the patentee is not an inventor or the employer of the inventors), only a person or an entity having interests in the patent has standing to file an invalidation action against said patent.
Are interim injunctions available in patent litigation proceedings?
Interim injunctions, known as “preliminary injunction” in Taiwan, are available in patent litigation proceedings. Courts will grant a preliminary injunction only in an extremely exceptional situation where the party moving for a preliminary injunction has established that the party will suffer irreparable harm due to the injuring acts and a preliminary injunction is indeed necessary for the purpose of preventing material harm or imminent danger or other similar circumstances. The court will consider four elements when determining whether to issue a preliminary injunction: (a) the possibility that applicant might succeed in its underlying claim; (b) whether the court’s preliminary injunction might cause irreparable damage to either party; (c) the degree of damage to both parties; and (d) the impact the preliminary injunction might have on the public interests. The impact on the public interests will be key to the court’s consideration when determining whether to issue a preliminary injunction against pharmaceutical products because said injunction might have a significant impact on human health or disease treatment.
According to the IP Court’s records, the granting rate for preliminary injunctions in cases in relation to patent and other intellectual property rights is approximately 39.17% (from 2008 to June 2019), and of the 120 applications, 47 were approved.
Under Taiwan’s IP practice, before the IP Court issues a preliminary injunction, the IP Court will require the infringing party to file a brief responding to arguments made by the moving party. Hearings may be held by the IP Court if necessary. A preliminary injunction could be enforced right by the moving party after the court issues the same, no matter whether the infringing party appeals the preliminary injunction. In other words, the moving parties do not have to wait for a preliminary injunction to become conclusive and finalized. In cases where the IP Court grants preliminary injunctions, the IP Court often requests the moving party to post a bond that could be used to compensate the infringing party’s potential loss due to the enforcement of the preliminary injunction in the events that the preliminary injunction was later set aside by appellate courts.
What final remedies, both monetary and non-monetary, are available for patent infringement? Of these, which are most commonly sought and which are typically ordered?
Typically, a patentee will sue in a patent infringement proceeding for a permanent injunction that prohibits the infringing party from manufacturing/selling the infringing products, as well as for a damage award. The IP Court will grant these two kinds of remedies if the patentee could establish the infringement and damages.
On what basis are damages for patent infringement calculated? Is it possible to obtain additional or exemplary damages?
A damage award would be granted by the IP Court if the patentee has established the infringement and the damage. The amount of said damage award may be calculated in accordance with the measures set forth by the Patent Act, including (1) actual damages and lost profits; (2) the difference in the patentee’s profits before and after the infringing activities; (3) profits gained by infringers; and (4) reasonable royalties.
An enhanced damage award is available if the infringement has been found to be committed willfully. In this situation, the court could grant an enhanced damage award of the amount greater than the actual damage; the amount of said enhanced damage award could not exceed three times of the actual damage.
How readily are final injunctions granted in patent litigation proceedings?
When the patentee establishes the infringement, i.e., the fact that the infringing products fail within the scope of the asserted claims, the IP Court will usually grant a permanent injunction that prohibits the defendants from continuing any infringing activities.
Are there provisions for obtaining declaratory relief, and if so, what are the legal and procedural requirements for obtaining such relief?
In a situation where a party denies the patent infringement allegation made by a patentee, said party is allowed to seek declaratory relief from the IP Court, to declare that the party does not infringe the patent asserted by the patentee. In a proceeding like this, the moving party shall not only establish non-infringement, but also persuade the IP Court to find a compelling interest that the moving party does need a court ruling to confirm its non-infringement.
What are the costs typically incurred by each party to patent litigation proceedings at first instance? What are the typical costs of an appeal at each appellate level?
For the plaintiff, the costs incurred at the first instance include court fees, attorney fees, and any expenses necessary for establishing the plaintiff’s case, such as the costs for testing the materials by an independent institute. If the plaintiff is a foreign company without a registered domicile in Taiwan, the defendant may request the court to order the plaintiff to post a bond that covers the court fees for the second and third instance.
For the defendant, the cost at the first instance is mostly the attorney fees.
At the appellate level, the party who appeals against the lower court’s ruling shall cover the court fees.
Can the successful party to a patent litigation action recover its costs?
The successful party to a patent litigation action usually can only recover court fees and litigation expenses that are necessary for the litigation. However, under the Code of Civil Procedure, attorney fees at the third and final instance, which are limited to less than 3% of the value of the claims and the maximum amount cannot exceed NT$ 500,000, can be included as litigation expenses and shall be paid by the party who lost the litigation. Moreover, there are provisional remedies proceedings under the Code of Civil Procedure that enable parties to obtain security for costs.
What are the biggest patent litigation growth areas in your jurisdiction in terms of industry sector?
Overall, one of the biggest patent litigation growth areas in Taiwan in terms of industry sector is the biotechnology industry, including the pharmaceutical industry. This reflects the policy direction that the Taiwan government has actively promoted in recent years. As the industry continues to grow, more and more new drugs and new medical materials enter into market, local and global.
Many international biotech companies have also developed patent portfolios in Taiwan. This situation has led to an increasing number of patent litigation disputes in Taiwan.
What do you predict will be the most contentious patent litigation issues in your jurisdiction over the next twelve months?
Calculation of damage awards has always been one of the most important issues in patent litigation. The amount of damage awards has considerable impacts on patentee’s incentives to enforce their patents in courts. In recent years, the IP Court in some high-profile cases has granted enhanced damage awards.
Since 2012, in response to the patent/royalty stacking circumstances in the modern technology society, more and more patent litigation judgments have referred to the concept of patent contribution rate. Patent contribution rate is the recognition of a patent’s value in the market, and this value is possessed by the patentee.
In recent judgments of the IP Court, opinions on whether and how the patent contribution rate is to be applied are not completely consistent. However, the IP Court currently tends to comprehensively consider the overall contribution of patents to the infringing products and assess a rate therefrom.
Therefore, it is foreseeable that the patent contribution rate in patent litigation will be a very contentious issue in Taiwan over the next twelve months.
Which aspects of patent litigation, either substantive or procedural, are most in need of reform in your jurisdiction?
From a substantive perspective, the amounts of monetary remedies granted by the IP Court are relatively low, and attorney fees and the costs incurred from collecting and investigating the infringement cannot be included in the damage compensation. These show the undervaluation of the patent. In addition, the patent invalidity ratio determined in infringement litigation is also slightly higher than that in other countries, which is a critical issue that Taiwan needs to consider.
Procedurally, there is a provision allowing the plaintiff to obtain a compulsory evidence collection order, a court order compels the defendant to produce materials that are in possession of the defendant but necessary for the plaintiff to establish its case. However, there are still cases in which the courts dismiss plaintiffs’ motion for said order. Reasons given by the IP Court for its denial of said orders include: to avoid the abuse of the proceedings, to avoid undue impact on the stock price of the alleged infringer, and to avoid unwanted disclosure of an alleged infringer’s trade secrets. Whether these reasons are legitimate grounds for the IP Court’s denial, Taiwan shall reconsider its evidence collection mechanism.
What are the biggest challenges and opportunities confronting the international patent system?
Taiwan’s innovations in energy, development of industrial clusters, and Research and Design expenditures amount of the proportion of GDP are among the best in the world, and are even ranked second in patent applications. These are Taiwan’s greatest opportunities for continued growth in the international patent system.
However, just there are many international cases of theft of patent technology, trade secrets, and talent, Taiwan is also facing such issues. Therefore, while actively developing a patent portfolio, it is necessary to prevent the interests of enterprises from being infringed. This may be the most difficult challenge in the international patent system for Taiwan.